MARKET TREND
FOR TODAY February
06, 2013
Yesterday was a relatively resilient session as the Markets
did not show more weakness than the opening weakness which was relatively much
less than its Asian peers and did not break down and traded the day in a capped
range above its critical supports, much on the expected lines. The Markets
opened negative back of weak global cues and continued to trade in 25-odd points
capped range. Though the global weakness was more, the markets held out its
important support levels as it recovered a bit after giving the day’s low of
5946.90 against the expected support levels of 5940. The levels of 50-DMA,
which is 5947.24 today has held out as support. The Markets ended the day at
5956.90, posting a net loss of 30.35 points or 0.51% while forming a lower top
and lower bottom on the Daily High Low charts.
For today, we are likely to see some respite from the
weakness that we have been seeing. Expect the Markets to open on a flat to
moderately positive note and look for directions. Today would be crucial
session for the Markets as it is expected to trade above 5940-5930 levels to
avoid any further weakness creeping in. Therefore, the intraday trajectory
would be important to decide the trend for today, as well as for coming days.
Today, the levels of 5940-5920 shall act as important and
immediate supports.
The RSI—Relative Strength Index on the Daily Chart is
44.1959 and it has reached its lowest value in last 14-days which is bearish.
However, it does not show any bearish or bullish divergence. The Daily MACD is
bearish as it continues to trade below its signal line.
On the derivative front, NIFTY Futures have shed 1.36 lakh
shares or little over 1% in open interest. The NIFTY PCR stands at 0.94 as
against 0.90 which is not so bad.
In last couple of days, we have seen quite large amount of
short positions being built by the FIIs. During this very same period, the DIIs
have remained net sellers in the Markets. Under similar circumstances where
FIIs pile up shorts, DIIs usually remain net buyers but the trend has been
opposite this time and the combination of these two factors have kept the
Markets under pressure since last couple of sessions.
Having said this, big amount of shorts still continue to exist
in the Markets. There has been no break down on the Charts and the Markets so
far, continue to trade in a broad trading range. As mentioned above, the
Markets will have to trade above the levels of 5940-5930 in order to avoid any
further weakness. It is advised to remain very light in positions while making
selective purchases. Shorts should be avoided as given the amount of short
positions, short trap may occur. A very selective and cautious approach with
positive optimism is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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